A report issued by foreign capital pointed out that the IC design manufacturer Realtek (2379-TW) by Super Micro (AMD-US) to sue for infringement of its graphics computing patent, which is still in the unregistered stage. In addition, TV SoCs account for a small proportion of Realtek’s overall revenue, and the impact is estimated to be limited. We maintain a neutral rating on Realtek.
The foreign capital said that it has received inquiries from investors recently, and Supermicro has asked the panel manufacturer TCL (01070-HK) and Realtek (2379-TW) filed a lawsuit, Supermicro accused the two companies of infringing on a number of its graphics computing processing patents, and the US International Trade Commission (USITC) has listed the case as a Pending Institution at this stage.
Foreign investors believe that the potential impact of the lawsuit on Realtek’s business is limited, mainly because Realtek has benefited from the strong growth of other businesses. It is expected that the proportion of TV SoC’s revenue this year is only 9%, which is lower than the 13% of the previous year. TV customers, TCL is not the biggest one.
Realtek did not comment on this, nor did it make an announcement on the public observatory. According to the past, Realtek would not make an announcement until the court filed an investigation. For example, on January 28 this year, Realtek announced on the public observatory that USITC had made a decision. Filed a case against Future Link Systems suing the company for infringing its patent rights.
Regarding investment proposals, foreign investors hold a neutral view on Realtek, mainly due to factors such as weak demand for consumer PCs, China’s lockdown and global inflation, etc. It is expected that the revenue in the second half of this year will only increase by 2% compared with the first half of the year, and the whole year of next year will also only increase annually. 5%, and considering the decline in the price of consumer products, the increase in the payment of fabs, and the continuous increase in the salary of engineers, the gross profit margin and profit margin may also be under pressure.
As for why it is not listed in the rating, the foreign capital added that Realtek has achieved an increase in market share with the upgrade of Wi-Fi 6, and the diversification of its product portfolio has helped to stabilize its profit. In addition, its price-to-earnings ratio is only 10 times, the yield rate is 7%, which is about 9 times relative to the historical low of the historical price-earnings ratio, and the downside is limited.